Il Primo Ministro greco Lucas Papademos riceve l'approvazione del governo su tagli al bilancio che corrispondono al 7% del Pil nei prossimi tre anni e su una ristrutturazione finalizzata a ridurre di €100 mld gli oltre €200 mld di debito detenuto dai creditori privati, atteso il voto del parlamento • Standard & Poor's declassa il merito creditizio di 34 banche italiane tra cui UniCredit a BBB+ da A, Intesa Sanpaolo a BBB+ da A e Banca Monte dei Paschi di Siena a BBB da BBB+, S&P anticipa "una redditività decisamente debole per le banche italiane nei prossimi anni" • La produzione industriale italiana aumenta a dicembre +1,4% da novembre +0,3%, oltre le stime degli economisti +0,5%, anche se i dati del quarto trimestre -2,1% suggeriscono che la terza economia della zona euro è entrata nella seconda recessione dal 2009 • I Btp decennali salgono per la quinta settimana consecutiva, il periodo di recupero più lungo in oltre cinque anni, la prossima settimana il Tesoro vende €4 mld di buoni al 6% con scadenza 2014 • L'euro cala dal massimo di due mesi contro il dollaro, il mercato azionario europeo cala dal massimo di sei settimane e l'azionario Usa registra la prima settimana di perdite del 2012 dopo che i ministri delle finanze europee non hanno concesso il pacchetto di aiuto necessario a prevenire il collasso economico della Grecia

martedì 16 ottobre 2012

Market Comment - October 16

(Marco Bonelli) Is everything coming together? - ...the reluctant rise of the factor 'hope'.

It looks like one or two better than expected economic data didn't trigger a lot of excitement and hope that the economic stand-still recovery might pick up a little speed but maybe broader themes like China and consumer spending does the trick.

China's better trade data for September, declining inflation, rising iron ore prices (and with that, hopes for a stabilization in steel production) and favorable comments from PBOC Vice-Governor Yi Gang, citing plenty of "room" for fiscal and monetary policy has been the best package of good news out of China for quite some time, which should at least stir up some hopes for a recovery of the second largest economy of the world.

On the domestic front, retail sales and consumer spending in general apparently contributes more to economic activity than anticipated. While the latest, better than expected, consumption-supportive data from the labor front (payrolls, unemployment rate and weekly jobless claims) might still be seen as questionable due to incorrect reporting from state level, consumer sentiment surveys and retail sales numbers were quite encouraging and built on better retail same-store sales since July and a better back-to-school shopping season. Historically, rising consumer confidence has always been translated into better retail sales in the months following the boost in confidence, so the holiday season already gets a positive preview.

On top of these developments, stocks received a first constructive boost from "the worst earnings season since 2009". Q3 earnings from C were cheered and some investors also took a second look at Friday's earnings reports from JPM and WFC and at least found some additional positive aspects, beside the bottom-line beat. The earnings season just got started and IBM, INTC and LLTC will kick off the reporting from the technology sector tonight, so there will be plenty of headlines and probably chances to turn around the negative sentiment towards earnings over the next couple of weeks.

This in combination with the chart picture should leave market players encouraged: The Dow Jones and SPX defended their break-out levels from March/April (13338 and 1422, respectively) and held the support of their 4-month uptrend from the lows beginning of June; the Nasdaq and Russell 2000 continue their consolidation at high levels and even the beaten Dow Jones Transportation Index stabilized above 5000. Even market participants who are concerned about the frightening consolidation (in AAPL-terms, probably the better description than 'correction') in AAPL shares with its price (almost) "free-falling" from above $700 to around $620 may get the opportunity to breathe through as the price held the support from the uptrend from May and also its 100day MA. With the iPad Mini introduction and also Q3 earnings coming up, buying the dip might also make sense here. If that works, the rest will follow as stocks and the economy go where AAPL goes (at least according to some opinions).

Combining sentiment that remains highly cautious and skeptical, an increasing number of better than expected economic data globally that further changes the current perception towards fundamental developments with the factor 'hope' slowly rising and many major indexes at technical support levels, presents market participants with a constructive short-term outlook! Therefore staying or getting invested in the technology, financial, capital goods and energy sector might turn out to be a successful move.

Trade well.

(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)

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